Catholic Charities reports alleged fraud scheme

| January 4, 2019 | 0 Comments

Discovery of an alleged fraud scheme involving money intended to help the homeless obtain housing with the assistance of Catholic Charities of St. Paul and Minneapolis has resulted in charges against several people and the investigation continues.

“The employment of Catholic Charities staff members suspected of being involved in the illegal activity was terminated, the individuals were reported to law enforcement, and the affected funding partners were notified,” the nonproft organization said in a statement. The statement did not say how many employees Catholic Charities terminated.

An internal investigation began in March 2017 and findings from the initial review were brought immediately to the U.S. Attorney’s office, Catholic Charities officials said. Catholic Charities is cooperating with law enforcement and the governmental agencies investigating the people allegedly involved, the organization said.

Catholic Charities is the “victim of a criminal scheme to defraud housing rental assistance funds,” its statement said. The total amount lost is expected to be less than $750,000 and Catholic Charities is working with its insurer to cover the losses, the organization said. The nonprofit regularly reviews its internal policies and procedures to prevent fraud and abuse and did so again in response to this incident, officials said.

MPRNews reported that five people face federal charges in the alleged scheme, which occurred from 2012 through early 2017. People allegedly posed as landlords renting to homeless people, got the nonprofit to send them checks and split the proceeds with at least one employee of the organization.

In statements about the alleged scheme, officials in Hennepin and Ramsey counties said Catholic Charities notified them in early 2017 about a federal investigation around misdirection of grant funds. The money came from the Minnesota Housing Finance Administration, they said.

To date, Catholic Charities has refunded about $102,000 to Ramsey County for grants between 2013 and 2017, officials in that county said. The money has been refunded to MHFA and the county is reviewing earlier grant years, officials said.

Hennepin County has been reimbursed more than $19,000 and sent that money to MHFA, officials in that county said. “The county’s internal audit process is ongoing and we anticipate to be refunded an additional several hundred thousand dollars,” county officials said.

Catholic Charities said it discovered the alleged acts, took action and is cooperating with all involved in the investigation. And the alleged scheme has not deterred it from its mission.

“Throughout the investigation, Catholic Charities has maintained these housing rental assistance programs and continues to ensure that men and women in need receive critical services and support,” the nonprofit said.

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